Home Capital stock surges after two lawsuits settled
TORONTO — Shares in Home Capital Group rose almost 13 per cent Thursday the day after news of settlements in two cases that could have complicated efforts to recover from a damaging loss in investor confidence. The Toronto-based mortgage lender’s stock gained $1.54 to close at $13.67 on the Toronto Stock Exchange.
The rebound in the stock followed an announcement Wednesday that Home Capital has agreed to pay $30.5 million to settle a class-action lawsuit and a matter before the Ontario Securities Commission concerning allegations of misleading disclosure. Home Capital’s shares took a thrashing in April, after Ontario’s securities regulator said it was pursuing allegations that the company and executives misled investors by not immediately disclosing what it uncovered about falsified loan applications.
The settlements are subject to OSC and court approval and conditional on the approval of the other.
In a separate statement Thursday, Home Capital said it is aware of recent media reports about a potential refinancing transaction, and while it has indicated it is pursuing additional financing and other strategic options, it does not comment on speculation.
Under the settlement announced Wednesday, Home Capital and three former executives will pay $12 million and cover $500,000 in costs to the OSC. The firm is also making a $29.5 million payment to settle a class-action lawsuit filed after the shares plunged, which includes $11 million paid in the proposed OSC deal, according to the statement.